Now Jen is on a mission to inspire and empower others through financial education so they too can enjoy the life they want to live. Jen shares her recipe for success, happiness and financial freedom via writing, blogging, speaking and coaching. As part of her commitment to community, Jen pledges her blogging profits as 0% microloans through Kiva.org to small businesses operated by working, impoverished women in developing countries.

If the idea of accumulating a million dollars (or even half of a million) for retirement is daunting then consider this: for every $1,000 reduction in monthly retirement spending you will similarly reduce how much money is needed to retire by $300,000.That is a big deal because most people will find it much easier to retire with bliss and happiness on $1,000 per month lower income than to figure out how to put away an additional $300,000 in retirement savings.

If this all sounds a little confusing rest assured it is just basic math. You can use an online retirement calculator or visit your favorite financial advisor and odds are very high that you will be told you can spend somewhere between 3% and 5% (depending on assumptions) of your savings each year during retirement and remain financially secure. To keep things simple we will assume a very middle-of-the-road 4% of retirement savings spent each year. What that means is you need roughly 25 times your annual spending in savings – otherwise known as the “Rule of 25” – to support this 4% spending habit. You may find this math mundane, but the implications can be very exciting to your retirement plan.

This same rule also tells you how much less you need to save for retirement if you are good at finding happiness and bliss in life while spending less. For example, if you can figure out how to reduce your retirement budget by just $1,000 per month ($12,000 per year) the rule of 25 says you just reduced how much money you need to retire by a whopping $300,000 ($12,000 * 25 = $300,000).

Spending a little less certainly sounds a lot easier than coughing up another $300,000, especially if retirement is just around the corner and your nest egg is not as robust as you might like. By learning to live more simply, you can enjoy financial freedom during your golden years. The key to retiring successfully on less is to find an appropriate level of spending that suits your needs and lifestyle without sacrificing happiness. The only limit here is your own creativity. If you can stay focused on your core values and determine the things that are really important you could completely transform your vision of retirement.

To help get you started, here are five easy ways to save $1,000 a month during retirement without sacrificing happiness:

1) Downsize

Since the kids are grown and out of the house, you don’t need five bedrooms anymore. A smaller house means a smaller property tax bill, lower maintenance costs, lower insurance premiums, and less hassle. Take it a step farther and downsize to a condo or townhouse close to the urban core and you can eliminate the cost of owning one or both of your cars while eliminating all yard and exterior maintenance work. Renting a car for occasional trips out of town is far less expensive than auto repairs and insurance. Following the rule of “less is more,” less stuff to care for means you have more free time to enjoy your retirement, and a combination of downsizing strategies should be able to save you at least $1,000 per month.

2) Move to Mexico

If you’re willing to leave the country then Mexico is a logical choice since it is close (you can drive there, after all). Not only is the cost of living much lower but the climate is appealing, the infrastructure is more modern and advanced than in much of Latin America, fresh fruit is in abundance, and you can surround yourself with other expatriates if you choose. Numerous websites offer logistical advice on relocating to Mexico and other inexpensive retirement havens outside the United States.

If Mexico isn’t your cup of tea then consider relocating to any number of places, foreign or domestic, that are less expensive than your current hometown. Money Magazine lists Sequim in Washington, Dunedin in Florida, Durango in Colorado, Fort Smith in Arkansas, and Janesville in Wisconsin as some of the most affordable places to retire in the United States. If you plan to travel a lot, where you call home may be of minimal importance and the savings could make a huge difference in how much money is needed to fund your retirement. Just do plenty of research before packing your bag: there are many valuable resources on the web to help you find just the right place for your retirement needs and budget – any one of which could save you at least $1,000 per month.

3) Trade Your Home For a RV

If your retirement plans involve extensive travel, consider selling your home and living in an RV. Unburdened by the labor and costs of home ownership, you’ll be free to travel as much as you like or stay put for months on end. Getting rid of your home means no more property taxes, homeowners insurance, maintenance costs or monthly payments, and the home equity is freed to produce investment income. With an RV your home and mode of travel are one and the same. Many retirees even find seasonal employment in national parks and campgrounds that provide a bit of income and social life. The rest of the year they’re free to follow the weather or the grandkids. An RV is easy to store while you travel abroad and you won’t have to worry about home security or frozen pipes. This lifestyle change can easily lower your costs by $1,000 per month and possibly raise your investment income by the same – two for the price of one.

4) Live Healthy

Health care costs eat up an increasing proportion of spending as you age. Although some medical issues are unavoidable, you can significantly reduce your health care spending by staying fit and living a healthy, active lifestyle. Eating low on the food chain is good for your body as well as your budget; prepackaged and processed foods often come at high prices with lower nutritional value. Similarly, regular exercise and a low-stress lifestyle can mean fewer trips to the doctor and fewer prescription medications that can quickly break your budget.

5) Make The Little Things Add Up

A thrifty shopper can easily save $1,000 a month on things like groceries, gifts, and recreation. As a retiree your time is flexible thus allowing you to take advantage of midweek savings on green fees, matinee discounts on movie and theater tickets, and early bird discounts in restaurants. Travel off-season and you will not only save money but you’ll encounter fewer crowds.

Develop the habit of asking for discounts and never paying full price. Don’t wait until December to do all your Christmas shopping—pick up items throughout the year at sale prices and give them at the appropriate time. Buy your wrapping paper and seasonal trinkets at the after holiday sales when prices are usually less than half. Or cut out gift expenses altogether and donate a fixed amount to charities or provide a charitable service personally in honor of your loved ones.

Become a grocery store “perimeter shopper,” avoiding the center aisles that are full of sugar, processed foods, and unhealthy snacks. Almost everything you need is around the perimeter of most grocery stores—produce, bread, milk, and meat. Buying certain items in bulk also saves cash. If you pick and choose from these and many other money saving strategies you could easily figure out how to live happily on $1,000 less per month.

Reduce How Much You Need To Retire By $600,000… or more!

Now that you see how easy it is to reduce your spending during retirement by $1,000 per month without sacrificing your happiness, try combining several of these cost saving strategies to double-down or triple-down and really make a big difference in how much money is needed to retire. It’s not hard to imagine a happy lifestyle living out of a motorhome, eating healthy, and enjoying off-season travel and recreation discounts.

Or if an exotic location is more to your liking then a low-cost lifestyle somewhere down in South America might just do the trick. Similarly, if you find it hard to shave expenses by $2,000 per month you may find it easy to pick up the equivalent in part time or temporary income. The math is the same. You might enjoy being a campground host in a beautiful national park, or maybe you are good at taxes and wouldn’t mind working for a few months each year during high tax season when the winter storms are raging.

The point is to get creative and figure out ways to simplify your life so that you spend less, reduce stress, and slash the amount you need to save so that you can retire now with financial security. Once you get past the notion that you have to keep up with the Joneses, you just might discover that you can enjoy retirement a whole lot more by spending a whole lot less.

This is a good way of analyzing your retirement needs although one would think that it only goes so far. For example, if you determine that you can live on only $1000 per month and therefore only need about $300,000 in savings, you are taking on too much risk. One serious illness and you have no cushion left over.

In my experience, I found that most people are hesitant to reduce their current lifestyle in order to retire early. However, in my communications with people who have retired early, I have found that early retirees are often willing to make sacrifices that most people are not. These are the types people who are most likely to find ways to reduce their spending by $1000 or more per month.

@Arohan – Yes, there are limits to how far you can take this process. However, you may be surprised where that limit is. The risks you discussed can be managed by insurance and reserves so I don’t see that as a huge issue. My experience is the key to the process is getting your spending in alignment with your values. That is how you spend less without inducing poverty consciousness. The game is not about “how little can I get by on”: instead, it is about “what spending is really necessary for me to live a fulfilling and creative life.” For most people, that is a lot less than Madison Avenue would lead you to believe.

@pfstock – I think you made some important points and I would like to add to the discussion…

The reason you noticed early retirees tend to show controlled spending is the financial impact is multiplicative – not additive – which is critical to retiring early if that is your goal. In other words, controlling spending is a valuable tool because while you earn money it increases savings, and it also lowers the savings threshold required to “retire”. It is a multiplicative effect. You save more, and you need less savings. The combined effect is dramatic when the goal is to retire early.

Regarding your use of the word “sacrifice”, I believe that is a common myth that keeps a lot of people from succeeding with this path. I don’t think either Jen or myself experienced the process as “sacrifice”. I really think of it more as getting my spending in alignment with my values. For example, I spend money on quality bicycles, hiking boots, top of the line running shoes, and a motorhome because I love camping, exercise, and outdoor recreation. Notice that I spend for the equipment but the activity costs little to enjoy. I also spend on organic, local food because I care about my health and food quality. The flip side is I rarely go out to fancy restaurants, drive nice but ordinary cars, and wear very casual clothing. It is all a statement of my values – no sacrifice is required. You just have to pay attention to where you spend so that you maximize the value you get for the money. There are a lot of fun and clever ways to do that.

This is a fine idea to convey. I see so many folks and articles written where retirement is something given up on, or at least postponed. I am lucky that I already need very little to retire (I already was retired for 7 years, working a litle more now just for saving a buffer for potential health expenses). I was lucky to get out of the market in 2007, having been through the bubbles of 1989 and 2001. My wife and I could truly live well on Social Security – another item to consider if one is old enough.

Part of the problem is that people want absolute security and guarantee, and there is no such thing. We all might get hit by a car tomorrow, unless we stay at home every day (lots of fun in that, huh?). Given that, attitude is actually more important than an actual dollar figure. Doing something you hate for money, versus living on less is no option to me. By the way, South Texas, where I live, has miles of undeveloped beaches, fresh produce, access to Mexico (and excellent Mexican dentists) and is extremely cheap to live. You’ll never see it listed in “Money” magazine, because they still think inside their own box. Buy into a mobile home community here, with Winter Texans from all over the U.S. for neighbors, and your expenses will drop about as much as possible. Then spend your time fishing, beach walking or selecting fresh fruit and veggies – or maybe learning Spanish, or Mexican cooking, or….?

I know I am double-dipping here, but since the subject is cutting living expenses: My mobile home is paid off (I paid $30K cash, although used ones are less) and my rent and all utilities, including electricity, is $400/month. This for 3 bedrooms, 2 baths at about the price of my Toyota Prius. Plus, our park has a pool and little rec/workout room. We have had zero crime in the 9 years we have lived here. Not all parks are like this, of course. You must check them out in advance, just like any neighborhood. But many will not, simply due to preconceived ideas. Those folks are called “commuters,” whereas, my neighbors are called “retirees.”

@ Ernest – Double-dipping should be avoided with guacamole at social occasions, but is totally welcome in these comments.

What really comes through is your enthusiasm for the concept and how choosing a low cost lifestyle has brought so much freedom and improved quality of life. Thanks for sharing and reinforcing the concept with real life experience.

We share a lot of the same values – fancy cars & meals out are unimportant to husband and myself. We shop the perimeter and truly enjoy cooking from scratch, and keep the pantry & freezer well stocked. We support local farmers & organic agriculture. We also shop for virtually everything second hand, pay cash for everything including our second hand autos, and do most of our own repairs for those autos and our home. It keeps us active and fit and we enjoy being self sufficient!

Not too long ago, we moved from the city to a less expensive rural area across the state line, just 50 miles away. I telecommute & husband travels the region, so location isn’t an issue. We downsized from 1800 sq feet to 910 sq feet – a big change in many ways! Though we have 4 acres now vs. a standard city lot before, the annual property taxes here are less by $800, the electricity is now $35 monthly instead of $85 monthly , and our heat is provided via a woodstove. We don’t need a/c because we are in the woods, and there’s lots of free wood available for heating. Huge bonus – NO income tax!

It’s not a lifestyle everyone would want to choose, and some of our friends thought we were nuts. But stepping away from `the Joneses’, and making a decision to deliberately downsize and live simply, has certainly had a very positive effect on our checkbook and our spirits! Living a less complex, less costly lifestyle is definitely our cup of tea!

Always make sure the country’s government is stable and likely to remain stable. You don’t want to buy a house and then have the military, who could be in bed with the drug lords, launch a coup. This is not an entirely unlikely event in Mexico at this time. See the link below for one article concerning this:

Basically, I’m saying do lots and lots of homework on the country you are thinking about moving to. Especially, if you plan on buying land/house. A year or two before you move it would be advisable to get a subscription to a service like Stratfor (like the CIA, but anyone can buy their analytical reports) and read up on the area you plan on moving to.

By the way, I am by no means saying that moving to a cheaper country is a bad idea. Just do it right.

@Chad – I agree wholeheartedly that due diligence is a necessary pre-requisite to any consideration of moving to a foreign country – particularly where property acquisition and significant dollars are involved. I also agree that Stratfor is a valuable resource for these issues. Well put, Chad. Thanks.

I have a ways to go to retirement, I am in my 40s, and have two young children, 5 and 2. So we will need to be in high earning jobs until they finish college, or at least until we dont feel the need to pay for it any longer. (I dont intend to pay for post graduate courses).
Once they have left the nest, we plan to retire and go travelling (on a budget). Then we will come back to be near our children, at this point I would be very happy to take a low stress job (Walmart greeter or the equivalent). My husband will want to stay home and try and make money from photography or some other art related project. But we do intend to earn some money.

So my question is: How do we determine how much we need to retire? It will have little to do with our current income. At the moment most of it goes to the mortgage (which will be paid off before the kids go to college) and childcare.

@Sarah – I love it when people ask me to unabashedly promote my products:-). In fact, I wrote the ebook How Much Money Do I Need To Retire to specifically answer your question. It explains the problems with conventional retirement planning methods and provides alternative solutions. It is the result of all the things I learned when I tried to figure out how much money I needed to retire.

Responding to the correct statement that it’s the smartest to retire with a low amount of fixed expense. That way you can do it with a smaller nest egg or income. Mush more easily accomplished than saving up another 300K.

This is all good information and the answer to my question may be on here somewhere but I haven’t found it yet so I thought I’d ask. I’m 43 and believe I have enough to retire early or settle in to the lower stress, shorter commute job i’ve been wanting. When considering if you have enough money saved do you consider home equity even though that’s considered less liquid? I own my own home and two investment properties outright. Do I consider their market price in my calculations or is it a given that in retirement you are expected to own your home and so you only count the 401k/pensions and savings etc in your “How much do I need to retire?” calculations? thanks

With socialism around the corner, I think you might be better off stashing as much cash and precious metals as possible for the fun stuff and let the governent handle the medical and food. Gamble, but it’s my plan and I am sticking to it!